H&R Block Budget Challenge Questions and Answers Graded A+

H&R Block Budget Challenge Questions and Answers Graded A+ Auto insurance A type of insurance used by vehicle owners to cover costs associated with car accidents. Budget A chart that documents how much money an individual earns and spends. Cash Flow The relationship between income and expenses in a budget. For example, if you spend more money than you have coming in, you have negative cash flow. Certificate of Deposit (CD) A savings vehicle offered through banks with a set maturity date. For example, if you put $5,000 into a five-year CD, you cannot withdraw the money until the five year maturity date without facing penalties. However, interest rates are usually higher in CDs than traditional savings accounts making them desirable for long term savings. City Income Tax Money collected by some city governments to be used for city public services, such as side walks and city water systems. Credit The ability to purchase goods or services with the promise to pay for them at a later time. Creditworthiness Demonstrating trust in repayment of borrowed money. Credit Card A plastic card that allows an individual to make a purchase on credit. Debit Card A plastic card that allows an individual make a purchase using funds from his or her own bank account(s). Deductions Money withheld from a paycheck for tax or savings purposes. Expenses Money spent on items and bills. Federal Income Tax Money collected by the federal government to be used for a variety of national public services, such as the military, national parks and monuments. Fixed Income and expenses that are the same each month. Flexible Income and expenses that are vary each month. Gross Income Total pay before deductions Health Insurance A type of insurance the minimizes financial risk related to medical expenses. Many employers offer health insurance as part of a benefits package to employees. Income Money earned through employment. Individual Retirement Account (IRA) An investment tool for individuals to save for retirement. There are two different types of IRAs for individuals: Traditional and Roth. Life Insurance A type of insurance that protects against the loss of income as a result of an individuals death. Medicare tax. Money collected by the federal government to provide health insurance benefits in retirement, and to certain individuals with